Cap and Trade Hits the Poor the Hardest

The Congress of Racial Equality (CORE), best known for its pioneering work in the civil rights movement, has joined an increasingly loud chorus calling out proposed “cap-and-trade” legislation as a regressive tax, and a steep one at that.

The civil rights challenge of our time is to stop extreme environmental policies that drive up the cost of energy and disproportionately hurt low income Americans and the working poor.”

As Innis himself notes, the American Gas Association (AGA) has extensively documented the high portion of income that goes towards energy costs for low-income families. Some key statistics:

• “The average median income family in America devotes about a nickel out of every dollar of income to energy costs.
• The average low-income family has to devote 20 cents of a dollar to energy.
• And the average family below the poverty line has to devote as much as 50 cents of every dollar to buy the energy they need.”

A tax that increases energy prices would disproportionately eat into the income of the poorest American families. During an economic downturn when many low-skilled Americans are experiencing the worst of the recession, a regressive tax hardly seems a good idea. With so many low-income individuals unemployed with poor job prospects, a tax on their energy usage would be economically devastating.

The bill’s supporters account for this prospect by proposing to provide energy credits to low-income families to help them pay their bills. Needless to say, there are problems with such an approach. Innis puts it well, dubbing the plan “energy welfare”:

First, they plan to tax the h*** out of us. Then they will give us back some of our own money so that we can pay for the higher cost-of-living that they themselves forced upon us.”

No surprise, there is little economic rationale to indicate that such a convoluted plan would provide the least bit of relief. The Wall Street Journal wasn’t kidding when they argued that cap-and-trade could be the “biggest tax in American history.” The Reason Foundation contends that even with household rebates, consumers would still end up paying much higher energy costs. After all, that is the point of the whole endeavor. By forcing consumers to pay higher energy costs, the thinking is that regulation can compel conservation, reduce energy use, and resultantly lower emissions. Never mind the economic catastrophe caused in the process.

Sidebar: Check out David Kreutzer, Heritage’s Senior Policy Analyst in Energy Economics and Climate Change, Center for Data Analysis, on the Glenn Beck Show tonight.

Join The Discussion

The movement to pass cap and trade is being led by General Electric and other big companies that stand to rape and pillage the taxpayers of this country. This is why the state run media ABC, NBC and the like who are owned by G.E. are promoting this. We have got to start boycotting these entities and hit them where it hurts. Starting with Hollywood we can bring them down. Boycott the state of California where the Idiots Nancy Pelosi and Harry Reid reside it's the only way we can stop all of this nonsense short of marching on Washington in mass.

They explain that low-income families stand to benefit the most from this legislation, granted they are protected from its devastation by a government [taxpayer] shield. Sigh.

Among other reasoning, they include investment in public transportation that could be advantageous to low-income families. These families could save $2,000 annually by shedding a car, if they own one. The study dilutes its argument by including evidence that while public transportation usage is/was growing, low-income families spend the smallest share of their income on public transportation, likely because it is impractical. The fixed costs of owning a car are covered, as are the savings of ditching a car, but not consideration for the value of convenience, which I understand is immeasurable. There isn't a strong case to invest in something that few people utilize, especially when the smallest user group is cited as the biggest benefactor.

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